Low pay: stop the race to the bottom

Submitted by Matthew on 26 September, 2012 - 12:23

Dozens of academics from Britain’s top universities — mainly professors of economics and business studies — have penned an open letter to the Times which calls for an end to national collective pay bargaining in the public sector.

The letter proposes a scheme whereby individual public sector bodies could negotiate local pay rates, thereby allowing pay to more closely reflect the cost of living in a particular area.

The letter states: “National pay rates in the public sector means that public sector wages are out of line with local conditions in many parts of the country. In some areas, the public sector struggles to recruit staff because wages are too low. This worsens public services such as education and health in those areas.”

This is all perfectly reasonable, surely? If the cost of living is higher, then wages should be higher to reflect this. Trade union campaigns in London have fought for a “London Living Wage” of £8.30 an hour – surely a form of local bargaining and local pay. So what’s the problem?

The problem is that the academics’ proposal is not intended to secure wage increases for workers, but rather to allow bosses to further cut pay. The scheme also involves a proposal to keep each region’s wage bill constant, meaning that any increases would be necessarily limited and creating an inbuilt compulsion towards “savings” — i.e., cuts. The proposal is designed to weaken workers’ strength by preventing us from bargaining on a national level, and freeing public sector bosses from the obligation to negotiate with our national unions.

Context is important, too. The letter is not written against the backdrop of benevolent public sector bosses clamouring to increase their employees’ wages.

The low pay epidemic in the public sector is now so acute that even senior figures in the Local Government Association are starting to baulk. Stephen Knight, a Liberal Democrat who sits on the LGA’s workforce board, believes that if the public sector pay freeze continues, some council workers could see their statutory pay fall below minimum-wage levels. He said: “Unless we have pay rises in the next year there will be a number of people falling below the statutory minimum wage, we are that close. We do need to have a pay rise next year.”

George Osborne’s proposals for greater regionalisation in determining public sector pay and conditions, and the already existing reality of de facto regional pay for some public sector workers (such as health workers in the south west, where Trusts and hospitals have formed a “pay cartel” to impose negotiations outside of the national framework) are also key contexts here. So, too, is the report by the Institute for Employment Research and Institute for Fiscal Studies which shows that low-income families could see their incomes plummet a further 15% by 2020, even if the economic downturn slows. With 2013/2014 public sector pay negotiations due to begin next month, the academics’ letter is clearly intended to create an atmosphere in which unions will feel pressured into accepting a shoddy deal for fear of losing the right to bargain nationally altogether.

At the extreme fringe of the pay cutters’ party within the ruling class are the likes of Kwasi Kwarteng and Dominic Raab, Tory MPs behind new book Britannia Unchained, who accuse British workers of being “the worst idlers in the world”, and believe that we must “compete” with workers in the global south by showing our willingness to work for extremely long hours and low wages. They might, as yet, be a minority voice, but they too are a shrill part of the growing ruling-class clamour to which the “respectable” voices of the academics behind the open letter have now been added.

The labour movement should respond with a counter-offensive around clear, simple demands. Firstly, the basic principle of a living wage – a wage which allows everyone, wherever they live, to not merely scrape by but to live a full and enjoyable life.

Secondly, the demand for “savings” to be found by cutting top managers’ pay and bureaucratic waste (for example, the huge amounts of money squandered on “management consultancy” in every branch of the public sector) rather than through cutting employees’ wages.